The writer is Distinguished Professor of Economics at Forman Christian College University and Beaconhouse National University.
People’s suffering has reached a peak, caught in the vice of record high summer temperatures and acute power outages. Let us indicate some urgent measures that the new government can undertake to mitigate the misery of its citizens.
The gap between the existing power generation and average demand (reported to be about 4,978 MW) is due to four proximate factors: first, substantial underutilisation of the available power production capacity. This is because the power producers in both the public and private sectors have not received sufficient payment of dues to even enable the purchase of furnace oil. Thus, most of the oil-based thermal power plants are shut down. Second, the available capacity is substantially below the installed capacity because over the years, the public sector power producers have failed to invest in maintenance and upgrade of plant and equipment due to the government’s budgetary mismanagement. Private sector power producers have not invested in maintenance and upgrade either, due to uncertainty about future profit prospects. Consequently, most production units have gone into disrepair with a subsequent capacity constraint. Third, a combination of obsolete transmission technology and widespread theft of electricity have resulted in losses of electricity during transmission of as much as 33 per cent in some areas. Fourth, there is load mismanagement. The distribution companies have not yet installed metres that could keep load managers informed about the electricity flowing through the system on an hourly rather than a monthly basis as at present. Consequently, power distribution companies do not have the information for load management in response to variations in power received during the 24-hour cycle. So, power is squeezed out from an already stressed system during short-term supply variations to meet average load-shedding targets. This causes tripping of power plants due to overload, thereby further reducing supply. Similarly, the failure to install “smart metres” for consumers means that peak load pricing cannot be undertaken. Hence, consumers cannot rationalise their pattern of electricity consumption during a 24-hour cycle.
Citizens are at the end of their tether. Providing quick relief will require the following initiatives with political will and high quality governance: first, Pakistan needs to import from Saudi Arabia on a deferred payment basis oil worth four billion dollars a year, over the next three years, to run its oil-based thermal power plants. Nimble diplomacy is required to get this done quickly, so that, at least, the available power production capacity can be brought online. The funds required (about Rs500 billion) to reduce circular debt also need to be mobilised. It means borrowing in the short term. In the medium term, the government can save Rs400 billion a year that it is currently spending to finance the losses of public-sector entities by restructuring and privatising them. Another Rs450 billion that are currently locked up in government commodity trading can be mobilised by privatising trading of commodities such as wheat and fertilisers.
Second, the machine and equipment requirements for raising available capacity to the installed capacity level need to be determined for each production unit. The necessary finance and management of the supply chain for fulfilling these requirements must be made available.
Third, metres for monitoring hourly supply flowing into the distribution system should be installed. At the same time, those personnel who are alleged to be selling electricity illegally on the basis of bribery should be disciplined. Indeed, the entire management structure and operating procedures of distribution companies should be reviewed.
Fourth, smart metres should be installed for consumers to enable peak load pricing. This will mean providing electricity during peak load periods at a higher price than during off-peak periods. This will incentivise both businesses and households to adjust the temporal pattern of their consumption so as to reduce electricity consumption and hence load, during peak hours.
Providing first aid to people in pain will require swift initiatives in foreign policy, financial management and governance of the power sector.
Published in The Express Tribune, May 30th, 2013.
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" most production units have gone into disrepair with a subsequent capacity constraint. " Typical restrained language from an academic. I have a friend in the power sector. He described the power stations and infrastructure as total shambles. He tells me most of the managers and engineers are clowns.
There is a chance to cut down power usage if people will be prepared to see the sense in using natural resouces i.e. wind in helping to cool down their houses, shops and offices in those regions where wind is freely available. In fact people have to learn and employ the technique used by planners of older houses who would design one central shaft in the house that would pull blowing wind into the shaft from roof level and then distribute it through the windows opening into rooms adjacent to the wind shaft. In North Africa they employ wind towers to bring in wind from the direction of flow of wind and then exhaust it through the other part of the same tower, thus causing air movement that makes people feel comfortable. We most of the time use an electric fan for that air movement instead of planning our buildings that will bring in air from the roof and then exhaust it through holes just under the room ceiling or through an exhaust tower. Airconditioning units increase heat because the unit itself generates heat as does and electric fan or any electric motor. A/C units and refrigerators simply transfer heat from inside to outside. So the use of A/C in congested areas will mean that outside it will get hotter when the heat from so many premises is exhausted outside.